Network will eventually be open to new members for secure digital sharing of healthcare information.

Aetna, Anthem, IBM, Health Care Service Corporation and PNC Bank have partnered to create a blockchain technology network aimed at improving transparency and interoperability in the healthcare industry.

The groups intend to use blockchain for more efficient claims and payment processing. Blockchain enables the secure exchange of information. It will also benefit more accurate provider directories.

WHY THIS MATTERS

Collaboration is key in the industry as a more cost-effective alternative to merging to create more competitive and efficient systems.

The current network is expected to add additional health organizations in the coming months, including providers, startups, and technology companies.

Initial members include three of the nation’s largest insurers, Anthem; HCSC,a customer-owned health insurer that includes Blue Cross and Blue Shield plans; Aetna, which is now part of the CVS Health business; IBM, which is a leading blockchain provider; and PNC Bank, which is a member of The PNC Financial Services Group.

Blockchain technology gives health systems an edge because it ideally creates faster, more efficient and secure claims and payment processing.

Insurers are mandated to maintain accurate provider directories, a time consuming and often manual practice involving numerous emails, phone calls and even fax exchanges.

For providers, a new technology that can actually reduce time spent in administrative clicks on a computer is a boon.

THE TREND

Despite major initiatives to digitize healthcare information, improvements in transparency and interoperability are still needed for that data to be shared.

Blockchain is designed to fill that role, reducing administrative errors and costs and ultimately enhancing patient care. The network also enables the companies to build and deploy new solutions.

Walmart last year filed a patent to use blockchain for medical records. A pharmaceutical industry consortium called the MediLedger Project, launched in 2017, is using blockchain to track pills across the supply chain, according to Fortune.

ON THE RECORD

“Through the application of blockchain technology, we’ll work to improve data accuracy for providers, regulators, and other stakeholders, and give our members more control over their own data,” said Claus Jensen, chief technology officer at Aetna

Rajeev Ronanki, Anthem chief digital officer Rajeev Ronanki: “Timely access to medical information has been a stumbling block for creating a seamless consumer experience. With a trusted foundation based on transparency and cryptography, we will provide a faster, safer and more secure way to exchange medical information to transform the consumer healthcare experience.”

What’s more, blockchain will enable large networks to exchange health data in a transparent and controlled way, according to Lori Steele, general manager for Healthcare and Life Sciences for IBM.

“Using this technology, we can remove friction, duplication, and administrative costs that continue to plague the industry,” added Chris Ward, head of product, PNC Treasury Management.

Medicare Advantage insurers added 1.4 million members to their rosters for 2019 coverage, as they looked to grow membership in a market known for being politically safe and predictably lucrative. But Advantage membership is growing at a slower pace compared with previous years.

According to the latest federal data showing enrollment as of this month, 22.4 million people are enrolled in Medicare Advantage for 2019 coverage—an alternative to the traditional Medicare program in which private insurers contract with the federal government to administer program benefits. That’s an increase of 6.8% since January 2018. Health insurers, however, managed to grow their Advantage membership base by more than 1.5 million in both 2016 and 2017.

Some industry experts were expecting more. “The formula was there: Health plans were aggressive, they got nice rate increases, the rules around benefit design relaxed a little bit,” explained Jeff Fox, president of Gorman Health Group, which provides technology and other services to Medicare Advantage plans.

Fox expected Advantage enrollment to increase by double-digits over the past year, as health plans invested heavily in marketing and the federal government provided one of the biggest rate increases for the plans in years at 3.4%. The Trump administration also granted Advantage plans the flexibility to provide more supplemental benefits in 2019, such as transportation and in-home care.

But Fox said distraction from the craziness of the November midterm elections may have kept some seniors from enrolling during the annual open enrollment that lasted from Oct. 15 to Dec. 7, 2018. While the CMS data captures some of the sign-ups from open enrollment, figures out next month are likely to be higher.

Despite the slower pace, many Advantage insurers still experienced big enrollment increases as they picked up more market share. About half of all members are covered by just three companies. UnitedHealth held onto the top spot, adding nearly 500,000 Advantage members in the past year for a total 5.7 million. UnitedHealth holds more than a quarter of the total Medicare Advantage market share.

Humana remained the No. 2 Advantage insurer with 3.9 million members, an increase of 10.4% over January 2018. But thanks to its acquisition of Aetna, CVS Health took the No. 3 spot with 2.2 million Advantage enrollees. Kaiser Foundation Health Plan and Anthem rounded out the top five insurers with the most Advantage members.

On a percentage basis, Anthem and Aetna grew membership the fastest. Anthem’s Medicare Advantage membership spiked 53% to 1.1 million members compared with the same time last year. The Indianapolis-based insurer has long focused on serving employers, but recently turned its sights to growing Medicare Advantage rolls through acquisitions and expansions in places where it already operates.

Anthem bought Florida-based Medicare plans HealthSun in December 2017 and America’s 1st Choice in February 2018, together giving Anthem about 170,000 more Advantage members. Anthem CEO Gail Boudreaux told investment analysts in July that the company would focus on selling group Medicare Advantage plans and serving medically complex dual-eligible members in 2019.

CVS Health, meanwhile, grew its Medicare membership by 26.7% in 2018 to 2.2 million through its acquisition of Aetna. The deal is still technically awaiting a federal judge’s approval. In a research note Monday, Barclays equity analyst Steve Valiquette noted that Aetna’s membership growth was driven by its expansion into about 360 new counties. Valiquette wrote that the growth experienced by some public health insurers during the annual enrollment period for 2019 coverage was driven more by market share gains than by industry growth.

Medicare Advantage enrollment is climbing as the baby boomer generation ages rapidly into Medicare. Those seniors are used to employer-sponsored managed-care plans and are choosing Advantage over traditional Medicare more often than previous generations did. Seniors also often get more benefits, including dental care, eyeglasses and gym memberships, with an Advantage plan.

Medicare Advantage also enjoys support from both political parties and is able to weather swings from one federal administration to the next, whereas insurers that sell plans in the individual market, for example, may have to deal with more volatility.

Moreover, Medicare Advantage margins tend to hover between 4% to 5%, whereas Medicaid margins come in at 2% to 3% and the individual market historically has had even lower margins, S&P analyst Deep Banerjee told Modern Healthcare in August. The group employer business has higher margins, but that market isn’t growing like Medicare Advantage is.

Specialty drugs made up about 3% of prescriptions in California in 2017 but accounted for more than half of the prescription drug spending that year, according to new report that compiled drug spending from nine insurers in that state.

According to the first Prescription Drug Cost Transparency Report released by the California Department of Insurance, there were about 270,000 specialty prescriptions compared to about 1.4 million brand-name prescriptions and about 8.9 million generic prescriptions in 2017.

Insurers—including Aetna, Anthem, Cigna, Kaiser Permanente and UnitedHealthcare—reported spending upwards of $606 million on specialty drugs, $271.3 million on brand-name drugs and $172.6 million on generics in 2017.

Among other findings, the report said:

In all, insurers reported that per member per month drug spending reached about $81 last year, or about 16.5% of premiums in 2017, comparable to per member per month spending of about $76 or 16.3% in 2016. Total health insurance premiums per member per month were about $491 in 2017, compared to about $470 in 2016.

Specialty prescriptions on average cost about $2,361 per prescription compared to about $236 for brand-name prescriptions and $29 for generics. Members typically pay about $113 per specialty prescription while insurers said they pay about $2,248 per specialty drug. They report members pay about $45 per brand-name drug, while insurers pick up $192 of the tab for brand names. And they report members typically pay about $10 for generics on average while insurers pay about $19.

The top 25 most frequently prescribed drugs in California represent about 40% of insurers’ overall spending. Specialty drugs make up about 1.3% of the 25 most frequently prescribed drugs and about 20% of insurers’ spending (resulting in a 3.7% impact on health insurance premiums.) In comparison, brand-name drugs make up about 6.8% of the most frequently prescribed drugs and about 11% of insurer spending (and a 1.2% impact on health insurance premiums). Generics represent about 32% of the most frequently prescribed drugs and 4% of the cost to insurers (and about .3% impact on premiums.)

1. Anthem’s operating revenue grew 4 percent in the third quarter of this year to $23 billion, up from $22.1 billion in the same period a year prior. The health insurer said premium increases and the return of the health insurance tax in 2018 positively affected operating revenue, as did growth in its Medicare business.

2. Anthem’s reduced footprint in the individual ACA exchanges, local group and Medicaid plans contributed to a year-over-year decline in membership in the third quarter of this year compared to the same three months in 2017. Anthem lost 753,000 members year over year and now has 39.5 million members. At the same time, Anthem grew its Medicare membership year over year by 267,000 members in the third quarter of this year through acquisitions and organic growth.

3. Anthem trimmed its medical loss ratio, or the amount the health insurer pays toward medical care versus overhead costs, to 84.8 percent in the third quarter of this year. That’s down from 87 percent in the same period last year. Lower taxes and better medical cost performance in its commercial and specialty insurance lines contributed to the improvement.

4. Including expenses and nonoperating gains, Anthem ended the third quarter of 2018 with $960 million in net income, up 29 percent from $747 million recorded in the same period last year.

Anthem has entered a new partnership with retail giant Walmart to offer members access to over-the-counter (OTC) medications.

Beginning in January, Anthem’s Medicare Advantage members will be able to use OTC plan allowances to purchase medications and other supplies such as support braces and pain relievers, the two companies announced on Monday.

Previously, MA beneficiaries with OTC allowances could purchase medications through a catalog or by calling a designated number. Some members were provided a card they could use at a limited set of retail stores.

The new partnership significantly expands access to OTC drugs and supplies by allowing members to make purchases at any of Walmart’s 4,700 locations.

“The program with Walmart will allow consumers to pick the shopping method that best fits their lifestyle and the initiative is expected to significantly reduce the out-of-pocket cost burden for those enrolled in Anthem’s affiliated MA health plan,” Anthem spokesperson Hieu Nguyen said in an email.

Walmart says 90% of Americans live within 10 miles of a Walmart. The partnership will also give members access to free two-day shipping on orders $35 or more.

“We believe that programs like this can make a tremendous difference for healthcare consumers who often live on a fixed income or are managing chronic medical conditions,” Felicia Norwood, executive vice president and president of Anthem’s Government Business Division, said in a statement. Sean Slovenski, senior vice president of health and wellness at Walmart, said the company is “thrilled to be working with Anthem to provide its Medicare Advantage members with convenient access to our broad assortment of high-quality over-the-counter products.”

Here’s a look at how the margins of the largest in the quarter, based on data compiled by Bloomberg:

U.S. health insurers just posted their best financial results in years, shrugging off worries that the worst flu season in recent history would hurt profits.

Aetna Inc., for instance, posted its widest profit margin since 2004. Centene Corp. had its most profitable quarter since 2008. And Cigna Corp., which reported on Thursday, had its biggest margin in about seven years.

Analysts at Morgan Stanley, in a research note, said insurers are in the midst of a “hot streak.”

One big reason for the windfall is the tax cuts passed by Congress last year, which in some cases more than halved what the insurers owe the government. Aetna said its effective tax rate fell to 16.8 percent from 39.6 percent, for example. Many insurers also spent less on medical care than analysts had expected, even taking into account increased spending on flu treatments.

Net income increased 30 percent driven by premium rate increases, the return of the health insurance tax and the acquisition of MA plans.

Anthem reported a 30 percent increase in net income for the first quarter compared to the same three months of 2017, but operating revenues remained relatively flat primarily due to the insurer’s planned exits from the Affordable Care Act marketplace.

On Wednesday, Anthem reported net income for the first quarter of $1.3 billion, versus 1 billion for the first three months in 2017.

First quarter operating revenues were relatively flat at $22.3 billion year-over-year due to a decrease in its individual market business.

In 2017, Anthem announced it would cut back its ACA footprint by about 70 percent.

Revenues were helped by premium rate increases to cover overall cost trends, the return of the health insurance tax and the acquisitions of HealthSun and America’s 1st Choice.

Anthem’s acquisition of HealthSun, completed at the end of 2017, added a Medicare Advantage health plan and delivery network in Florida.

The acquisition of America’s 1st Choice was finalized in February. The privately-held, for-profit Medicare Advantage organization offers HMO products, including chronic special needs plans and dual-eligible special needs plans under its Freedom Health and Optimum brands in Florida. The deal added 135,000 Medicare Advantage members and included a 5 star plan.

Anthem’s medical enrollment totaled approximately 39.6 million members as of March 31, a decrease of 1 million or 2.5 percent percent, from 40.6 million at March 31, 2017.

The company said it now expects medical enrollment to be between 40.1 – 40.3 million for the full year 2018.

Counteracting the individual market decline, Anthem’s government business grew 10 percent year-over-year through a focus on serving the complex social and medical requirements of the dual special needs population.

Medical enrollment declined by 616,000 during the first quarter reflecting a decrease in the individual and local group fully-insured businesses. Medicare grew by 237,000 members and Medicaid enrollment declined by 120,000 individuals.

“We are pleased with our first quarter 2018 financial performance, which reflects our commitment to strong medical cost performance by effectively leveraging community based innovative and integrated clinical and value based care models across our markets,” said CEO and President Gail Boudreaux. “Throughout 2018, we are prioritizing investments to create a more flexible infrastructure that can quickly respond to the evolving needs of our customers and the changing healthcare environment.”